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Financial Corporation "Sistema"

November 28, 2016

Sistema announces financial results for the third quarter 2016

Moscow, Russia – 28 November 2016 – Sistema PJSFC (“Sistema” or the “Company”, together with its subsidiaries, “the Group”) (LSE: SSA, MOEX: AFKS), a publicly-traded diversified holding company operating primarily in Russia and the CIS, today announces its unaudited consolidated financial results in accordance with International Financial Reporting Standards (IFRS) for the quarter ended 30 September 2016.


-         Consolidated revenue and adjusted OIBDA growth driven by private subsidiaries

-         MTS: continued outperformance relative to peers and strong focus on shareholder returns

-         Successful asset monetisation with sales of stakes in SG-trans and MTS

-         Significant progress on debt optimisation


-         Consolidated revenues grew by 1.3% YoY to RUB 185.2 billion

-         Adjusted OIBDA[1] rose 8.7% YoY to RUB 56.4 billion with an adjusted OIBDA margin of 30.5%

-         Adjusted profit attributable to Sistema up 12.5 times YoY to RUB 6.0 billion

-         Net debt[2] at the Corporate Centre level amounted to RUB 80.6 billion as at 30 September 2016

-         As at 30 September 2016, the cash position[3] at the Corporate Centre level was RUB 18.7 billion, excluding RUB 3.2 billion represented by deposits                                                                              

Mikhail Shamolin, President and Chief Executive Officer of Sistema, said:

“Sistema delivered another set of strong results in the third quarter of 2016, driven by impressive performance of private assets, which together increased revenues by 6% and more than doubled OIBDA year-on-year.

“Despite a highly competitive environment and macroeconomic pressures impacting revenues and operating income, our largest asset, MTS, maintained its market share and reported healthy results, with an OIBDA margin of 41%, the highest and most resilient among its key competitors.

“While MTS is positioned strongly to benefit from future easing of competition and macro recovery in Russia, it remains focused on remuneration to shareholders. The company distributed RUB 52 billion in dividends in the course of the year and also announced a share buyback of up to RUB 10 billion in the fourth quarter of 2016.  

“Superior revenue growth of our private subsidiaries was driven by continued expansion at Detsky Mir and Segezha Group, which posted revenue increases of 35% and 19% year-on-year, respectively. We also saw very solid results from Agroholding Steppe, which again confirm that this business is developing as a major driver of growth for the Group.

“We maintain strong investment momentum across the most promising segments of our home market, Russia. After the end of the reporting period we expanded our agriculture portfolio with an acquisition of an additional 66,000 hectares in the south of Russia, bringing our total land bank to 313,000 hectares. Earlier this month we also acquired nine high-quality Regional Hotel Chain hotels located in Moscow and eight other cities in Russia, which brings the total number of hotel rooms operated by Sistema’s assets to over 3,660. We expect this transaction will position us to benefit from growth in domestic tourism while it also creates a basis for the restructuring and turnaround of our asset pool in the sector.

“In the third quarter, we continued to monetise our assets, with the sale of a 50% stake in SG-trans and 1.27% of MTS. Successful divestments provide us with additional funds and help the Group to demonstrate to the market the value of its non-public businesses. In line with our strategy, we continue to consider options for further monetisation of Detsky Mir, including a private placement or an IPO, potentially as early as the first half of 2017.

“We are committed to increasing shareholder returns, and this year saw Sistema pay a total of RUB 10.1 billion in dividend, 123% growth vs. 2015.”

Vsevolod Rozanov, Senior Vice President and Chief Financial Officer of Sistema, said:

“In the third quarter of 2016, our adjusted OIBDA increased by 8.7% year-on-year, with over 21% of the portfolio’s total OIBDA coming from our private subsidiaries versus 10% in the same period of 2015. A significant contribution to this growth came from MTS Bank, which achieved profitability on both OIBDA and bottom-line levels due to improved operational performance.

“This year, we expect that strong growth at our private assets will result in their cash return to the Corporate Centre of over RUB 12 billion, which together with MTS dividends and asset monetisations will support our investment resources and deleveraging initiatives.

“After the reporting period we also continued our debt optimisation initiatives as we successfully placed local bonds totalling RUB 16.5 billion, replacing FX liabilities and lengthening repayment terms on rouble debt. We plan to further optimise the structure of our debt portfolio, which will position Sistema for continued growth and successful delivery on our strategic targets.”




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